##### Table of Contents



---

---

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549


FORM 10-Q

|(Mark one) | 
|---------- | 
|[X]        | 

For the quarterly period ended June 30, 2003


OR


|    |  |                                                                                         
|--- |  | ----------------------------------------------------------------------------------------
|[ ] |  | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

ANCHOR GLASS CONTAINER CORPORATION




(Exact name of registrant as specified in its charter)


|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|Delaware                                                       |  | 59-3417812                          
|                                                               |  |                                     
|(State or other jurisdiction of
incorporation or organization) |  | (I.R.S. Employer
Identification No.)

|                                                       |  |           
|------------------------------------------------------ |  | ----------
|One Anchor Plaza, 4343 Anchor Plaza Parkway, Tampa, FL |  | 33634-7513
|                                                       |  |           
|(Address of principal executive offices)               |  | (Zip Code)

Registrants telephone number, including area code: 813-884-0000

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X]      No [  ].

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act). Yes [  ]      No [X].

Number of shares outstanding of common stock at August 14, 2003:

9,000,000 shares




---

---





---

TABLE OF CONTENTS



|                                        |                                                                                               |                                                                    |  |  |  |  |  | 
|--------------------------------------- | --------------------------------------------------------------------------------------------- | ------------------------------------------------------------------ |  |  |  |  |  | 
|PART I  FINANCIAL INFORMATION         
|                                        | Item 1. Financial Statements                                                                 
|                                        |                                                                                               | CONDENSED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
|                                        |                                                                                               | CONDENSED BALANCE SHEETS                                          
|                                        |                                                                                               | CONDENSED STATEMENTS OF CASH FLOWS                                
|                                        |                                                                                               | NOTES TO CONDENSED FINANCIAL STATEMENTS                           
|                                        | Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
|                                        | Item 3. Quantitative and Qualitative Disclosures about Market Risk                           
|                                        | Item 4. Controls and Procedures                                                              
|PART II  OTHER INFORMATION            
|                                        | Item 1. Legal Proceedings                                                                    
|                                        | Item 2. Changes in Securities and Use of Proceeds                                            
|                                        | Item 3. Defaults Upon Senior Securities                                                      
|                                        | Item 4. Submission of Matters to a Vote of Security Holders                                  
|                                        | Item 5. Other Information                                                                    
|                                        | Item 6. Exhibits and Reports on Form 8-K                                                     
|SIGNATURES                             
|Ex-31.1 Section 302 CEO Certification  
|Ex-31.2 Section 302 CFO Certification  
|Ex-32 Section 906 CEO/CFO Certification



---



##### Table of Contents



ANCHOR GLASS CONTAINER CORPORATION

FORM 10-Q

For the Quarterly Period Ended June 30, 2003

INDEX

|                               |  |                                                                                                                                                                                                        |  |         
|------------------------------ |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | --------
|                               |  |                                                                                                                                                                                                        |  | Page No.
|                               |  |                                                                                                                                                                                                        |  |         
|PART I - FINANCIAL INFORMATION |  |                                                                                                                                                                                                       
|                               |  | Item 1. Financial Statements:                                                                                                                                                                          |  |         
|                               |  | Condensed Statements of Operations and Comprehensive Income (Loss) -
Three and Six Months Ended June 30, 2003 (Reorganized Company) and
Three and Six Months Ended June 30, 2002 (Predecessor Company) |  | 3       
|                               |  | Condensed Balance Sheets -
June 30, 2003 and December 31, 2002 (Reorganized Company)                                                                                                                   |  | 4       
|                               |  | Condensed Statements of Cash Flows -
Six Months Ended June 30, 2003 (Reorganized Company) and
Six Months Ended June 30, 2002 (Predecessor Company)                                                     |  | 5       
|                               |  | Notes to Condensed Financial Statements                                                                                                                                                                |  | 6       
|                               |  | Item 2. Managements Discussion and Analysis of Financial
Condition and Results of Operations                                                                                                          |  | 10      
|                               |  | Item 3. Quantitative and Qualitative Disclosures About
Market Risk                                                                                                                                     |  | 16      
|                               |  | Item 4. Controls and Procedures                                                                                                                                                                        |  | 16      
|PART
II - OTHER INFORMATION    |  | 16                                                                                                                                                                                                    
|                               |  | Item 1. Legal Proceedings                                                                                                                                                                              |  | 16      
|                               |  | Item 2. Changes in Securities and Use of Proceeds                                                                                                                                                      |  | 17      
|                               |  | Item 3. Defaults Upon Senior Securities                                                                                                                                                                |  | 17      
|                               |  | Item 4. Submission of Matters to a Vote of Security Holders                                                                                                                                            |  | 17      
|                               |  | Item 5. Other Information                                                                                                                                                                              |  | 17      
|                               |  | Item 6. Exhibits and Reports on Form 8-K                                                                                                                                                               |  | 17      
|SIGNATURES                     |  | 18                                                                                                                                                                                                    

2



---



##### Table of Contents






PART I - FINANCIAL INFORMATION




Item 1. Financial Statements.




ANCHOR GLASS CONTAINER CORPORATION
CONDENSED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
(unaudited)
(dollars in thousands, except per share data)

|                                                                                                                                                   |                                     |                                    |                   |         |                     |     |                     |         |            |     |              |         |       |     |            |         |       |   | 
|-------------------------------------------------------------------------------------------------------------------------------------------------- | ----------------------------------- | ---------------------------------- | ----------------- | ------- | ------------------- | --- | ------------------- | ------- | ---------- | --- | ------------ | ------- | ----- | --- | ---------- | ------- | ----- | - | 
|                                                                                                                                                   |                                     |                                    |                   |         | Reorganized Company |     | Predecessor Company
|                                                                                                                                                   |                                     |                                    |                   |         |                     |     |                    
|                                                                                                                                                   |                                     |                                    |                   |         | Six Months          |     | Three Months        |         | Six Months |     | Three Months
|                                                                                                                                                   |                                     |                                    |                   |         | Ended               |     | Ended               |         | Ended      |     | Ended       
|                                                                                                                                                   |                                     |                                    |                   |         | June 30,            |     | June 30,            |         | June 30,   |     | June 30,    
|                                                                                                                                                   |                                     |                                    |                   |         | 2003                |     | 2003                |         | 2002       |     | 2002        
|                                                                                                                                                   |                                     |                                    |                   |         |                     |     |                     |         |            |     |             
|Net sales                                                                                                                                          |                                     | $                                  | 349,225           |         |                     | $   | 186,822             |         |            | $   | 378,260      |         |       | $   | 199,878    |        
|Costs and expenses:                                                                                                                                |                                     |                                    |                   |         |                     |     |                     |         |            |     |              |         |       |     |            |        
|                                                                                                                                                   | Cost of products sold               |                                    |                   | 320,989 |                     |     |                     | 168,062 |            |     |              | 340,671 |       |     |            | 176,099 |      
|                                                                                                                                                   | Selling and administrative expenses |                                    |                   | 13,466  |                     |     |                     | 6,820   |            |     |              | 15,224  |       |     |            | 7,531   |      
|                                                                                                                                                   | Restructuring, net                  |                                    |                   |        |                     |     |                     |        |            |     |              | 1,429   |       |     |            | 1,429   |      
|                                                                                                                                                   |                                     |                                    |                   |         |                     |     |                     |         |            |     |              |         |       |     |            |        
|Income from operations                                                                                                                             |                                     |                                    | 14,770            |         |                     |     | 11,940              |         |            |     | 20,936       |         |       |     | 14,819     |        
|Reorganization items, net                                                                                                                          |                                     |                                    |                  |         |                     |     |                    |         |            |     | (2,700       | )       |       |     | (2,700     | )      
|Other income (expense), net                                                                                                                        |                                     |                                    | (224              | )       |                     |     | 364                 |         |            |     | 483          |         |       |     | (380       | )      
|Interest
expense (Contractual interest for the six and three months ended June
30, 2002, $15,017 and $7,834, respectively)                         |                                     |                                    | (25,138           | )       |                     |     | (11,007             | )       |            |     | (13,974      | )       |       |     | (6,791     | )      
|                                                                                                                                                   |                                     |                                    |                   |         |                     |     |                     |         |            |     |              |         |       |     |            |        
|Net income (loss)                                                                                                                                  |                                     | $                                  | (10,592           | )       |                     | $   | 1,297               |         |            | $   | 4,745        |         |       | $   | 4,948      |        
|                                                                                                                                                   |                                     |                                    |                   |         |                     |     |                     |         |            |     |              |         |       |     |            |        
|Series
A and B preferred stock dividends (Contractual dividends for the six
and three months ended June 30, 2002, $7,028 and $3,514, respectively) |                                     |                                    |                   |         |                     |     |                     |         |            | $   | (4,100       | )       |       | $   | (586       | )      
|                                                                                                                                                   |                                     |                                    |                   |         |                     |     |                     |         |            |     |              |         |       |     |            |        
|Income applicable to common stock                                                                                                                  |                                     |                                    |                   |         |                     |     |                     |         |            | $   | 645          |         |       | $   | 4,362      |        
|                                                                                                                                                   |                                     |                                    |                   |         |                     |     |                     |         |            |     |              |         |       |     |            |        
|Basic net income per share applicable
to common stock                                                                                              |                                     |                                    |                   |         |                     |     |                     |         |            | $   | 0.12         |         |       | $   | 0.83       |        
|                                                                                                                                                   |                                     |                                    |                   |         |                     |     |                     |         |            |     |              |         |       |     |            |        
|Basic weighted average number of
common shares outstanding                                                                                         |                                     |                                    |                   |         |                     |     |                     |         |            |     | 5,251,356    |         |       |     | 5,251,356  |        
|                                                                                                                                                   |                                     |                                    |                   |         |                     |     |                     |         |            |     |              |         |       |     |            |        
|Diluted net income per share
applicable to common stock                                                                                            |                                     |                                    |                   |         |                     |     |                     |         |            | $   | 0.12         |         |       | $   | 0.15       |        
|                                                                                                                                                   |                                     |                                    |                   |         |                     |     |                     |         |            |     |              |         |       |     |            |        
|Diluted weighted average number of
common shares outstanding                                                                                       |                                     |                                    |                   |         |                     |     |                     |         |            |     | 5,251,356    |         |       |     | 33,805,651 |        
|                                                                                                                                                   |                                     |                                    |                   |         |                     |     |                     |         |            |     |              |         |       |     |            |        
|Comprehensive income (loss):                                                                                                                       |                                     |                                    |                   |         |                     |     |                     |         |            |     |              |         |       |     |            |        
|                                                                                                                                                   |                                     | Net income (loss)                  |                   | $       | (10,592             | )   |                     | $       | 1,297      |     |              | $       | 4,745 |     |            | $       | 4,948 |  
|                                                                                                                                                   |                                     | Other comprehensive income (loss): |                   |         |                     |     |                     |         |            |     |              |         |       |     |            |         |       |  
|                                                                                                                                                   |                                     |                                    | Derivative income |         |                     | 707 |                     |         |            | 897 |              |         |       | 531 |            |         |       |  | 
|                                                                                                                                                   |                                     |                                    |                   |         |                     |     |                     |         |            |     |              |         |       |     |            |        
|Comprehensive income (loss)                                                                                                                        |                                     | $                                  | (9,885            | )       |                     | $   | 2,194               |         |            | $   | 5,276        |         |       | $   | 4,948      |        
|                                                                                                                                                   |                                     |                                    |                   |         |                     |     |                     |         |            |     |              |         |       |     |            |        

See Notes to Condensed Financial Statements.

3



---



##### Table of Contents






ANCHOR GLASS CONTAINER CORPORATION
CONDENSED BALANCE SHEETS
(dollars in thousands)

|                                      |  |                                                     |                                          |   |                     |         |                   |   |         |         | 
|------------------------------------- |  | --------------------------------------------------- | ---------------------------------------- | - | ------------------- | ------- | ----------------- | - | ------- | ------- | 
|                                      |  |                                                     |                                          |   | Reorganized Company
|                                      |  |                                                     |                                          |   |                    
|                                      |  |                                                     |                                          |   | June 30, 2003       |         | December 31, 2002
|                                      |  |                                                     |                                          |   | (unaudited)         |         |                   |   |        
|                                      |  |                                                     |                                          |   |                     |         |                  
|ASSETS                                |  |                                                     |                                          |   |                     |         |                   |  
|Current assets:                       |  |                                                     |                                          |   |                     |         |                   |  
|                                      |  | Cash and cash equivalents                           |                                          | $ | 320                 |         |                   | $ | 351     |        
|                                      |  | Restricted cash                                     |                                          |   |                    |         |                   |   | 4,387   |        
|                                      |  | Accounts receivable                                 |                                          |   | 44,462              |         |                   |   | 42,070  |        
|                                      |  | Inventories:                                        |                                          |   |                     |         |                   |   |         |        
|                                      |  |                                                     | Raw materials and manufacturing supplies |   |                     | 23,918  |                   |   |         | 22,796  | 
|                                      |  |                                                     | Finished products                        |   |                     | 108,369 |                   |   |         | 79,353  | 
|                                      |  | Other current assets                                |                                          |   | 8,728               |         |                   |   | 8,603   |        
|                                      |  |                                                     |                                          |   |                     |         |                   |  
|                                      |  |                                                     | Total current assets                     |   |                     | 185,797 |                   |   |         | 157,560 | 
|Property, plant and equipment, net    |  |                                                     | 448,531                                  |   |                     |         | 384,386           |  
|Other assets                          |  |                                                     | 14,601                                   |   |                     |         | 6,815             |  
|Intangible assets                     |  |                                                     | 7,240                                    |   |                     |         | 7,636             |  
|                                      |  |                                                     |                                          |   |                     |         |                   |  
|                                      |  | $                                                   | 656,169                                  |   |                     | $       | 556,397           |  
|                                      |  |                                                     |                                          |   |                     |         |                   |   |         |        
|LIABILITIES AND STOCKHOLDERS EQUITY  |  |                                                     |                                          |   |                     |         |                   |  
|Current liabilities:                  |  |                                                     |                                          |   |                     |         |                   |  
|                                      |  | Borrowings under revolving credit facility          |                                          | $ | 38,382              |         |                   | $ | 47,413  |        
|                                      |  | Current maturities of long-term debt                |                                          |   | 9,057               |         |                   |   | 8,315   |        
|                                      |  | Accounts payable                                    |                                          |   | 43,999              |         |                   |   | 46,969  |        
|                                      |  | Accrued expenses                                    |                                          |   | 19,791              |         |                   |   | 35,314  |        
|                                      |  | Accrued interest                                    |                                          |   | 13,755              |         |                   |   | 5,167   |        
|                                      |  | Accrued compensation and employee benefits          |                                          |   | 25,551              |         |                   |   | 26,331  |        
|                                      |  |                                                     |                                          |   |                     |         |                   |  
|                                      |  |                                                     | Total current liabilities                |   |                     | 150,535 |                   |   |         | 169,509 | 
|Notes and long-term capital leases    |  |                                                     | 315,496                                  |   |                     |         | 182,433           |  
|Long-term obligation to PBGC          |  |                                                     | 58,296                                   |   |                     |         | 60,640            |  
|                                      |  |                                                     |                                          |   |                     |         |                   |  
|                                      |  | Total long-term debt                                |                                          |   | 373,792             |         |                   |   | 243,073 |        
|Long-term post-retirement liabilities |  |                                                     | 40,831                                   |   |                     |         | 40,342            |  
|Other long-term liabilities           |  |                                                     | 30,648                                   |   |                     |         | 26,974            |  
|                                      |  |                                                     |                                          |   |                     |         |                   |  
|                                      |  |                                                     | 445,271                                  |   |                     |         | 310,389           |  
|Commitments and contingencies         |  |                                                     |                                          |   |                     |         |                   |  
|Stockholders equity:                 |  |                                                     |                                          |   |                     |         |                   |  
|                                      |  | Preferred stock                                     |                                          |   | 1                   |         |                   |   | 1       |        
|                                      |  | Common stock                                        |                                          |   | 900                 |         |                   |   | 900     |        
|                                      |  | Participation component of Series C preferred stock |                                          |   | 750                 |         |                   |   | 750     |        
|                                      |  | Capital in excess of par value                      |                                          |   | 78,349              |         |                   |   | 78,349  |        
|                                      |  | Accumulated deficit                                 |                                          |   | (20,534             | )       |                   |   | (3,691  | )      
|                                      |  | Accumulated other comprehensive income              |                                          |   | 897                 |         |                   |   | 190     |        
|                                      |  |                                                     |                                          |   |                     |         |                   |  
|                                      |  |                                                     | 60,363                                   |   |                     |         | 76,499            |  
|                                      |  |                                                     |                                          |   |                     |         |                   |  
|                                      |  | $                                                   | 656,169                                  |   |                     | $       | 556,397           |  
|                                      |  |                                                     |                                          |   |                     |         |                   |   |         |        

See Notes to Condensed Financial Statements.

4



---



##### Table of Contents






ANCHOR GLASS CONTAINER CORPORATION
CONDENSED STATEMENTS OF CASH FLOWS
(unaudited)
(dollars in thousands)

|                                      |                                                                                                |  |                                              |          |                |        |                |         |   |        |  
|------------------------------------- | ---------------------------------------------------------------------------------------------- |  | -------------------------------------------- | -------- | -------------- | ------ | -------------- | ------- | - | ------ | -
|                                      |                                                                                                |  |                                              |          | Reorganized    |        | Predecessor   
|                                      |                                                                                                |  |                                              |          | Company        |        | Company       
|                                      |                                                                                                |  |                                              |          |                |        |               
|                                      |                                                                                                |  |                                              |          | Six Months     |        | Six Months    
|                                      |                                                                                                |  |                                              |          | Ended June 30, |        | Ended June 30,
|                                      |                                                                                                |  |                                              |          | 2003           |        | 2002          
|                                      |                                                                                                |  |                                              |          |                |        |               
|Cash flows from operating activities: |                                                                                                |  |                                              |          |                |        |                |        
|                                      | Net income (loss)                                                                              |  | $                                            | (10,592  | )              |        | $              | 4,745   |  
|                                      | Adjustments to reconcile net income (loss) to cash
provided by (used in) operating activities: |  |                                              |          |                |        |                |         |  
|                                      |                                                                                                |  | Depreciation and amortization                |          |                | 33,409 |                |         |   | 27,994 |  
|                                      |                                                                                                |  | Write-off and amortization of financing fees |          |                | 4,433  |                |         |   | 1,207  |  
|                                      |                                                                                                |  | Other                                        |          |                | 210    |                |         |   | (78    | )
|                                      | Decrease in cash resulting from changes in assets and
liabilities                              |  |                                              | (39,231  | )              |        |                | (762    | )
|                                      |                                                                                                |  |                                              |          |                |        |                |        
|                                      |                                                                                                |  | (11,771                                      | )        |                |        | 33,106         |        
|Cash flows from investing activities: |                                                                                                |  |                                              |          |                |        |                |        
|                                      | Expenditures for property, plant and equipment                                                 |  |                                              | (56,183  | )              |        |                | (37,256 | )
|                                      | Purchase of equipment under leases                                                             |  |                                              | (39,217  | )              |        |                |        |  
|                                      | Proceeds from sale of property, plant and equipment                                            |  |                                              | 10,414   |                |        |                | 3,112   |  
|                                      | Change in restricted cash                                                                      |  |                                              | 4,387    |                |        |                |        |  
|                                      | Payments for strategic alliances with customers                                                |  |                                              |         |                |        |                | (1,266  | )
|                                      | Other                                                                                          |  |                                              | (1,714   | )              |        |                | (976    | )
|                                      |                                                                                                |  |                                              |          |                |        |                |        
|                                      |                                                                                                |  | (82,313                                      | )        |                |        | (36,386        | )      
|Cash flows from financing activities: |                                                                                                |  |                                              |          |                |        |                |        
|                                      | Proceeds from issuance of long-term debt                                                       |  |                                              | 300,000  |                |        |                |        |  
|                                      | Principal payments of long-term debt                                                           |  |                                              | (173,834 | )              |        |                | (1,036  | )
|                                      | Payment of capital lease obligations for assets purchased                                      |  |                                              | (5,539   | )              |        |                |        |  
|                                      | Plan distributions to Series A preferred stock                                                 |  |                                              | (3,678   | )              |        |                |        |  
|                                      | Repurchase of warrants                                                                         |  |                                              | (1,500   | )              |        |                |        |  
|                                      | Net repayments on revolving credit facility                                                    |  |                                              | (9,031   | )              |        |                |        |  
|                                      | Net draws on prior revolving credit facilities                                                 |  |                                              |         |                |        |                | 4,233   |  
|                                      | Payment of financing fees                                                                      |  |                                              | (12,365  | )              |        |                |        |  
|                                      |                                                                                                |  |                                              |          |                |        |                |        
|                                      |                                                                                                |  | 94,053                                       |          |                |        | 3,197          |        
|Cash and cash equivalents:            |                                                                                                |  |                                              |          |                |        |                |        
|                                      | Decrease in cash and cash equivalents                                                          |  |                                              | (31      | )              |        |                | (83     | )
|                                      | Balance, beginning of period                                                                   |  |                                              | 351      |                |        |                | 416     |  
|                                      |                                                                                                |  |                                              |          |                |        |                |        
|                                      | Balance, end of period                                                                         |  | $                                            | 320      |                |        | $              | 333     |  
|                                      |                                                                                                |  |                                              |          |                |        |                |         |  
|Supplemental noncash activities:      |                                                                                                |  |                                              |          |                |        |                |        
|                                      | Non-cash equipment financing                                                                   |  | $                                            | 10,000   |                |        | $              |        |  
|                                      |                                                                                                |  |                                              |          |                |        |                |         |  

See Notes to Condensed Financial Statements.

5



---



##### Table of Contents






ANCHOR GLASS CONTAINER CORPORATION
NOTES TO CONDENSED FINANCIAL STATEMENTS
(unaudited)
(dollars in thousands, except per share data)

NOTE 1  Basis of Presentation

Organization of the Company

On August 30, 2002, Anchor Glass Container Corporation (Anchor or the
Company), a Delaware corporation, completed a restructuring of its existing
debt and equity securities pursuant to a plan of reorganization (the Plan)
under Chapter 11 of the United States Bankruptcy Code. Certain investment funds
and managed accounts affiliated with Cerberus Capital Management, L.P.
(Cerberus) acquired all of the outstanding capital stock of Anchor through
their investment in Anchor Glass Container Holding L.L.C. (AGC Holding), a
Delaware limited liability company formed in August 2002 and the parent company
of Anchor. As of June 30, 2003, AGC Holding owns approximately 95% of the
outstanding common stock and 100% of the outstanding Series C Participating
Preferred Stock of Anchor. Certain current officers and a former officer of
Anchor hold the remaining outstanding shares of common stock of Anchor.

Condensed Financial Statements

In the opinion of management, the accompanying condensed financial
statements contain all adjustments, consisting only of normal recurring
adjustments, that are necessary to present fairly the financial position as of
June 30, 2003 and the results of operations for the three and six months ended
June 30, 2003 and 2002 and cash flows for the six months ended June 30, 2003
and 2002.

The effective date of the Plan was August 30, 2002. The financial
statements of the Company as of and for periods subsequent to August 31, 2002
are referred to as the Reorganized Company statements. All financial
statements prior to that date are referred to as the Predecessor Company
statements.

Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted. Subject to the limitations on
comparability indicated in the preceding paragraph, it is suggested that these
condensed financial statements be read in conjunction with the financial
statements of Anchor included in the Companys Annual Report on Form 10-K for
the year ended December 31, 2002. The results of operations for the interim
periods are not necessarily indicative of the results of the full fiscal year.

Certain amounts of prior periods in the accompanying condensed financial
statements have been reclassified to conform to the current presentation.

NOTE 2  Senior Secured Notes

Effective February 7, 2003, the Company completed an offering of 11%
Senior Secured Notes due 2013, aggregate principal amount of $300,000 (the
Senior Secured Notes), issued under an indenture dated as of February 7,
2003, among the Company and The Bank of New York, as Trustee (the Indenture).
The Senior Secured Notes are senior secured obligations of the Company, ranking
equal in right of payment with all existing and future unsubordinated
indebtedness of the Company and senior in right of payment to all future
subordinated indebtedness of the Company. The Senior Secured Notes are secured
by a first priority lien, subject to certain permitted encumbrances, on
substantially all of Anchors existing real property, equipment and other fixed
assets relating to Anchors nine operating glass container manufacturing
facilities. The collateral does not include inventory, accounts receivables or
intangible assets.

Proceeds from the issuance of the Senior Secured Notes, net of fees, were
approximately $289,000 and were used to repay 100% of the principal amount
outstanding under Anchors 11.25% First Mortgage

6



---



##### Table of Contents



ANCHOR GLASS CONTAINER CORPORATION
NOTES TO CONDENSED FINANCIAL STATEMENTS
(unaudited)
(dollars in thousands, except per share data)

Notes due 2005, aggregate
principal amount of $150,000 (First Mortgage Notes) plus accrued interest
thereon ($156,256 in total), 100% of the principal amount outstanding under the
senior secured term loan (the Term Loan) plus accrued interest thereon and a
prepayment fee ($20,354 in total) and advances then outstanding under the
$100,000 credit facility (the Revolving Credit Facility) ($66,886 in total),
which included funds for certain of the Companys capital improvement projects.
The remaining proceeds of approximately $45,000 were used to terminate certain
equipment leases by purchasing from the respective lessors the equipment leased
thereunder.

Interest on the Senior Secured Notes accrues at 11% per annum and is
payable semiannually on each February 15 and August 15 to registered holders of
the Senior Secured Notes at the close of business on the February 1 and August
1 immediately preceding the applicable interest payment date. The first
interest payment date is August 15, 2003.

The Senior Secured Notes are redeemable, in whole or in part, at the
Companys option on or after February 15, 2008, at redemption prices listed in
the Indenture. At any time (which may be more than once) before February 15,
2006, the Company at its option may redeem up to 35% of the initial outstanding
notes with money raised in one or more public equity offerings, at redemption
prices listed in the Indenture. The Indenture provides that upon the occurrence
of a change of control, the Company will be required to offer to purchase all
of the Senior Secured Notes at a purchase price equal to 101% of the principal
amount thereof plus accrued interest to the date of purchase.

The Indenture, subject to certain exceptions, restricts the Company from
taking various actions including, but not limited to, subject to specified
exceptions, the incurrence of additional indebtedness, the payment of dividends
and other restricted payments, the granting of additional liens, mergers,
consolidations and sales of assets and transactions with affiliates.

The Company entered into a Registration Rights Agreement on February 7,
2003. Under the Registration Rights Agreement, the Company registered with the
Securities and Exchange Commission exchange notes, having substantially
identical terms as the Senior Secured Notes, under a registration statement
declared effective June 26, 2003. The Company commenced an offer, on June 30,
2003, to the holders of the Senior Secured Notes, to exchange their Senior
Secured Notes for a like principal of new Senior Secured Notes, identical in
all material respects to the Senior Secured Notes, except that the new Senior
Secured Notes would not bear legends restricting the transfer thereof. The
Company completed the exchange offer on August 5, 2003.

NOTE 3  Equity Incentive Plan

In 2002, the Board of Directors of Anchor (the Board) approved an Equity
Incentive Plan designed to motivate and retain individuals who are responsible
for the attainment of the Companys primary long-term performance goals that
covers employees, directors and consultants. The plan provides for the grant
of nonqualified stock options and incentive stock options for shares of Anchor
common stock and restricted stock to participants of the plan selected by the
Board or a committee of the Board (the Administrator). Effective January 9,
2003, the Administrator granted a total of 225,000 non-qualified stock options
to selected participants. The terms and conditions of awards, as determined by
the Administrator, are as follows: 50% of an option grant vests 1/3 on the
first anniversary of the grant date, 1/3 on the second anniversary of the grant
date and 1/3 on the third anniversary of the grant date; and the remaining 50%
of the option grant vests in three tranches of equal amounts on the first,
second and third anniversary of the grant date if the Company attains certain
performance targets established by the Board.

In December 2002, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 148 - Accounting for
Stock-Based Compensation - Transition and Disclosure, an

7



---



##### Table of Contents



ANCHOR GLASS CONTAINER CORPORATION
NOTES TO CONDENSED FINANCIAL STATEMENTS
(unaudited)
(dollars in thousands, except per share data)

amendment of Statement
No. 123 (SFAS 148). SFAS 148 amends Statement of Financial Accounting
Standards No. 123  Accounting for Stock-Based Compensation (SFAS 123) to
provide alternative methods of transition for a voluntary change to the fair
value based method of accounting for stock-based employee compensation.
Effective January 1, 2003, the Company has adopted the fair value based method
of accounting for stock-based employee compensation under SFAS 123 by applying
the prospective method of accounting, under which the Company applies the
recognition provisions to all employee awards granted after the beginning of
2003. The following table illustrates the effect on net income (loss) and
income per share as if the fair value based method had been applied to all
outstanding awards in each period:

|                                                        |                                                                                                      |             |         |                     |   |                     |       |               |   |               |       |     |      |   |       |     |      | 
|------------------------------------------------------- | ---------------------------------------------------------------------------------------------------- | ----------- | ------- | ------------------- | - | ------------------- | ----- | ------------- | - | ------------- | ----- | --- | ---- | - | ----- | --- | ---- | 
|                                                        |                                                                                                      |             |         | Reorganized Company |   | Predecessor Company
|                                                        |                                                                                                      |             |         |                     |   |                    
|                                                        |                                                                                                      |             |         | Six Months          |   | Three Months        |       | Six Months    |   | Three Months 
|                                                        |                                                                                                      |             |         | Ended               |   | Ended               |       | Ended         |   | Ended        
|                                                        |                                                                                                      |             |         | June 30, 2003       |   | June 30, 2003       |       | June 30, 2002 |   | June 30, 2002
|                                                        |                                                                                                      |             |         |                     |   |                     |       |               |   |              
|Net income (loss), as reported                          |                                                                                                      | $           | (10,592 | )                   |   | $                   | 1,297 |               |   | $             | 4,745 |     |      | $ | 4,948 |    
|                                                        | Add: Stock-based employee
compensation expense
included in reported net
income (loss)                |             |         | 21                  |   |                     |       | 13            |   |               |       |    |      |   |       |    |     
|                                                        | Deduct: Total stock-based
employee compensation
expense under fair value
based method for all awards |             |         | (21                 | ) |                     |       | (13           | ) |               |       | (42 | )    |   |       | (22 | )   
|                                                        |                                                                                                      |             |         |                     |   |                     |       |               |   |               |       |     |      |   |       |    
|Pro forma net income (loss)                             |                                                                                                      | $           | (10,592 | )                   |   | $                   | 1,297 |               |   | $             | 4,703 |     |      | $ | 4,926 |    
|                                                        |                                                                                                      |             |         |                     |   |                     |       |               |   |               |       |     |      |   |       |    
|Basic net income per share
applicable to common stock   |                                                                                                      |             |         |                     |   |                     |       |               |   |               |       |     |      |   |       |    
|                                                        |                                                                                                      | As reported |         |                     |   |                     |       |               |   |               |       | $   | 0.12 |   |       | $   | 0.83 | 
|                                                        |                                                                                                      |             |         |                     |   |                     |       |               |   |               |       |     |      |   |       |    
|                                                        |                                                                                                      | Pro forma   |         |                     |   |                     |       |               |   |               |       | $   | 0.12 |   |       | $   | 0.83 | 
|                                                        |                                                                                                      |             |         |                     |   |                     |       |               |   |               |       |     |      |   |       |    
|Diluted net income per share
applicable to common stock |                                                                                                      |             |         |                     |   |                     |       |               |   |               |       |     |      |   |       |    
|                                                        |                                                                                                      | As reported |         |                     |   |                     |       |               |   |               |       | $   | 0.12 |   |       | $   | 0.15 | 
|                                                        |                                                                                                      |             |         |                     |   |                     |       |               |   |               |       |     |      |   |       |    
|                                                        |                                                                                                      | Pro forma   |         |                     |   |                     |       |               |   |               |       | $   | 0.12 |   |       | $   | 0.15 | 
|                                                        |                                                                                                      |             |         |                     |   |                     |       |               |   |               |       |     |      |   |       |    

Salaried employees of the Company participated in an incentive stock
option plan of Anchors former indirect parent. These options, which have been
cancelled, generally had a life of 10 years and vested ratably over three
years. The Company elected to follow Accounting Principles Board Opinion No. 25
 Accounting for Stock Issued to Employees in accounting for these options in
the three months and six months ended June 30, 2002.

NOTE 4  Commitments and Contingencies

In September 2001, The National Bank of Canada, acting on its own behalf
and on behalf of PNC Bank, filed a complaint, in Allegheny Common Pleas Court,
against Anchor, GGC L.L.C. (GGC), Consumers U.S., Inc. (the Companys former
parent) and certain other former affiliates of Anchor. The complaint alleged,
among other things, fraudulent conveyances made by GGC to Anchor and tortious
interference with the contractual relationship between the bank and GGC and
sought monetary damages. On May 19, 2003, the Company entered into an agreement
under which the bank agreed to settle and discontinue the action referred to
above in return for the Companys agreement to contingently guarantee certain
indebtedness of GGC to the bank, in an amount not to exceed $1.65 million, over
a maximum term of fourteen months, with the amount of the guarantee decreasing on a
monthly basis. The recording of the

8



---



##### Table of Contents



ANCHOR GLASS CONTAINER CORPORATION
NOTES TO CONDENSED FINANCIAL STATEMENTS
(unaudited)
(dollars in thousands, except per share data)

fair value of the guarantee did not have a
material effect on the financial position or results of operations of the
Company.

In addition, the Company is, and from time to time may be, a party to
routine legal proceedings incidental to the operation of its business. The
outcome of any pending or threatened proceedings is not expected to have a
material adverse effect on the financial condition, operating results or cash
flows of the Company, based on the Companys current understanding of the
relevant facts. Legal expenses incurred related to these contingencies are
generally expensed as incurred.

The Companys operations are subject to various federal, state and local
requirements that are designed to protect the environment. Such requirements
have resulted in the Company being involved in related legal proceedings,
claims and remediation obligations. Based on the Companys current
understanding of the relevant facts, the Company does not believe that its
environmental exposure is in excess of the reserves reflected on its balance
sheet, although there can be no assurance that this will continue to be the
case.

Unpaid
dividends on the Series C Participating Preferred Stock of $4,751 for
the six months ended June 30, 2003 were accrued and included in
long-term liabilities on the accompanying condensed balance sheet.

On August 30, 2002, pursuant to the PBGC Agreement (as defined below),
Anchor had granted the Pension Benefit Guaranty Corporation (PBGC) a warrant
for the purchase of 474,000 shares of its common stock. In June 2003, the
Company repurchased all of the outstanding warrants held by the PBGC
for a negotiated price of $1.5 million. The repurchase was
accounted for as a charge to accumulated deficit.

NOTE 5  Subsequent Event

On August 5, 2003, the Company completed an additional offering of 11%
Senior Secured Notes due 2013, aggregate principal amount of $50.0 million (the
Additional Notes). Proceeds from the issuance of the Additional Notes, net
of fees, were approximately $49.5 million. In addition, the Company received a
$3.75 million premium upon issuance. The terms of the Additional Notes are
identical in all material respects to the Senior Secured Notes, except that
interest accrues from the date of the issuance of the Additional Notes rather
than February 7, 2003 and the Additional Notes are subject to certain
restrictions on transfer. No less than 75% of the net proceeds from the
issuance of the Additional Notes will be used to finance improvements to the
collateral securing the Senior Secured Notes and the Additional Notes or to
refinance indebtedness incurred by the Company to finance improvements to the
collateral, in each case in compliance with the Indenture. Pending application
of such proceeds, a portion of the net proceeds were used to pay down advances
outstanding under the Revolving Credit Facility of approximately $49.7 million.
Any portion of the net proceeds not so used as provided for above will be used
for general corporate purposes. Pending application of the net proceeds, they
will be invested in short-term U.S. government securities.

The Company entered into a Registration Rights Agreement on August 5, 2003
with respect to the Additional Notes. Under the Registration Rights
Agreement, the Company will use its reasonable best efforts to
register with the Securities and Exchange Commission exchange notes having substantially identical terms as the
Additional Notes.

9



---



##### Table of Contents






Item 2. Managements Discussion and Analysis of Financial Condition and
Results of Operations

Overview

Company Background

The Company is the third largest manufacturer of glass containers in the
United States, focused solely on this packaging industry segment. The Company
has nine strategically located facilities where it produces a diverse line of
flint (clear), amber, green and other colored glass containers of various
types, designs and sizes for the beer, flavored alcoholic beverages,
non-alcoholic beverages, liquor and food markets. The Company manufactures and
sells its products to many of the leading producers of products in these
categories.

Senior Secured Notes Offering

On February 7, 2003, the Company completed an offering of $300.0 million
aggregate principal amount of 11% Senior Secured Notes due 2013, issued under
the Indenture. The Senior Secured Notes are senior secured obligations of the
Company, ranking equal in right of payment with all existing and future
unsubordinated indebtedness of the Company and senior in right of payment to
all future subordinated indebtedness of the Company. The Senior Secured Notes
are secured by a first priority lien, subject to certain permitted
encumbrances, on substantially all of Anchors existing real property,
equipment and other fixed assets relating to Anchors nine operating glass
container manufacturing facilities. The collateral does not include inventory,
accounts receivables or intangible assets.

Proceeds from the issuance of the Senior Secured Notes, net of fees, were
approximately $289.0 million and were used to repay 100% of the principal
amount outstanding under the First Mortgage Notes plus accrued interest thereon
(approximately $156.3 million in total), 100% of the principal amount
outstanding under the Term Loan plus accrued interest thereon and a prepayment
fee (approximately $20.4 million in total) and advances then outstanding under
the Revolving Credit Facility (approximately $66.9 million in total), which
included funds for certain of the Companys capital improvement
projects. During the first quarter of 2003, the
remaining proceeds of approximately $45.0 million were used to terminate
certain equipment leases by purchasing from the respective lessors the
equipment leased thereunder.

On August 5, 2003, the Company completed an additional offering of 11%
Additional Notes. Proceeds from the issuance of the Additional Notes, net of
fees, were approximately $49.5 million. In addition, the Company received a
$3.75 million premium upon issuance. The terms of the Additional Notes are
identical in all material respects to the Senior Secured Notes, except that
interest accrues from the date of the issuance of the Additional Notes rather
than February 7, 2003 and the Additional Notes are subject to certain
restrictions on transfer. No less than 75% of the net proceeds from the
issuance of the Additional Notes will be used to finance improvements to the
collateral securing the Senior Secured Notes and the Additional Notes or to
refinance indebtedness incurred by the Company to finance improvements to the
collateral, in each case in compliance with the Indenture. Pending application
of such proceeds, a portion of the net proceeds were used to pay down advances
outstanding under the Revolving Credit Facility of approximately $49.7 million.
Any portion of the net proceeds not so used as provided for above will be used
for general corporate purposes. Pending application of the net proceeds, they
will be invested in short-term U.S. government securities.

The Company entered into a Registration Rights Agreement on August 5, 2003
with respect to the Additional Notes. Under this agreement, the Company is
required to register exchange notes having substantially identical terms as the
Additional Notes.

Reorganization

On August 30, 2002, Anchor consummated a significant restructuring of its
existing debt and equity securities through a Chapter 11 reorganization (the
Reorganization). As part of this Reorganization, Cerberus, through certain
Cerberus-affiliated funds and managed accounts, invested $80.0 million of new
equity capital into Anchor, acquiring 100% of Anchors Series C Participating
Preferred Stock for $75.0 million and 100% of Anchors Common Stock for $5.0
million. In addition, Anchor

10



---



##### Table of Contents



arranged for a $20.0 million Term Loan from Ableco Finance LLC
(which was subsequently repaid with a portion of the proceeds from the offering
of the Senior Secured Notes). In connection with the restructuring, Anchor also
put in place a new $100.0 million Revolving Credit Facility. In addition,
Anchor settled various lawsuits, eliminated certain related party claims and
contracts and entered into an agreement with the PBGC settling Anchors
outstanding pension liability (the PBGC Agreement).

The Reorganization was consummated on August 30, 2002; however, for
accounting purposes, the Company has accounted for the reorganization and fresh
start adjustments as of August 31, 2002, to coincide with its normal financial
closing for the month of August. The Companys financial statements as of and
for periods subsequent to August 31, 2002 are referred to as the
Reorganized
Company statements. All financial statements prior to that date are referred
to as the Predecessor Company statements.

Results of Operations

Net sales.Net sales for the second quarter of 2003 were $186.8 million
compared to $199.9 million for the second quarter of 2002, a decrease of $13.1
million, or 6.5%. Net sales for the first half of 2003 were $349.2 million and
$378.3 million for the comparable period of 2002. The decrease in net sales of
approximately $29.1 million, or 7.7%, was principally the result of a decrease
in unit shipments of approximately 9.5% in the six months ended June 30, 2003
as compared with the same period of 2002, offset by certain price increases. A
significant percentage of the volume and net sales dollar decline was
experienced in the flavored alcoholic beverage product line. The Company
believes that the negative impact on sales was due to the softness in the
economy, the effect of the military action against Iraq and the harsh weather
conditions experienced during the winter in certain parts of the United States.

Cost of products sold.The Companys cost of products sold in the second
quarter and the first half of 2003 was $168.1 million and $321.0 million,
respectively (or 90.0% and 91.9% of net sales), while the cost of products sold
for the second quarter and first half of 2002 was $176.1 million and $340.7
million, respectively (or 88.1% and 90.1% of net sales). This decline in margin
in 2003 principally was due to the increase in the cost of natural gas, the
principal fuel for manufacturing glass, of approximately $5.3 million and $10.7
million, respectively, in the three months and six months ended June 30, 2003,
as compared with the same periods of 2002, and the decline in sales noted
above. The Company also incurred costs associated with downtime during the
capital improvement project at the Henryetta, Oklahoma facility in the first
quarter of 2003 and during the modernization project at the Elmira, New York
facility in the first quarter of 2002. In addition, margin was impacted by cost
increases, especially for depreciation, offset by additional manufacturing
efficiencies due to the Companys cost reduction efforts and by reduced
operating lease expense of approximately $4.5 million in the six months ended
June 30, 2003 as a result of the buyout of certain equipment leases.

Selling and administrative expenses.Selling and administrative expenses
for the three months and six months ended June 30, 2003 were $6.8 million and
$13.5 million, respectively, or 3.7% and 3.9% of net sales, while selling and
administrative expenses for the three months and six months ended June 30, 2002
were $7.5 million and $15.2 million, respectively, or 3.8% and 4.0% of net
sales. Selling and administrative expenses declined as a result of lower
personnel and benefit costs and lower professional fees incurred in the first
half of 2003 as compared with the first half of 2002.

Restructuring, net and Reorganization items, net. In 2002, the Company
incurred costs directly related to its Chapter 11 reorganization and costs that
directly resulted from the Companys restructuring through the Plan.
Reorganization items were items that met the definition of reorganization items
under the provisions of American Institute of Certified Public Accountants
Statement of Position 90-7 Financial Reporting by Entities in Reorganization
Under the Bankruptcy Code, which included costs and gains that were incurred
after the Chapter 11 filing and were a direct result of the bankruptcy
proceeding. Restructuring items included costs and gains that directly related
to the restructuring of the Company through the Plan and were either incurred
prior to the Chapter 11 filing or were not incurred as a direct result of the
bankruptcy itself. No comparable costs were incurred in 2003.

11



---



##### Table of Contents



Interest expense.Interest expense for the second quarter of 2003 was
$11.0 million compared to $6.8 million for the second quarter of 2002, an
increase of $4.2 million. Interest expense for the first half of 2003 was $25.1
million compared to $14.0 million for the first half of 2002, an increase of
$11.1 million. A noncash write-off of approximately $3.6 million, for deferred
fees related to debt repaid with proceeds from the Senior Secured Notes, was
included in interest expense in 2003. Interest expense related to the Senior
Secured Notes in 2003 increased approximated $6.3 million, as compared with
interest expense related to the First Mortgage Notes in 2002. Interest expense
components in 2003 with no comparable charge in the same period of 2002
included approximately $2.8 million of interest related to the PBGC Agreement,
a $0.3 million penalty for the Term Loan prepayment and an approximately $0.4
million consent fee paid to the First Mortgage Note holders. Interest expense
in 2002, not recurring in 2003, included an approximately $1.6 million accrual
of interest on the 9.875% Senior Notes due 2008, aggregate principal amount of
$50.0 million (the Senior Notes) (which were repaid on August 30, 2002). The
increase was also partially offset by lower average interest rates and lower
average borrowings outstanding under the Companys Revolving Credit Facility in
2003.

Net income (loss).The Company recorded net income of $1.3 million for the
second quarter of 2003 as compared to net income of $4.9 million for the second
quarter of 2002. The Company recorded a net loss of $10.6 million in the first
half of 2003 as compared to net income of $4.7 million for the first half of
2002. The decline in earnings for the second quarter and first half of 2003
were primarily due to the increase in the cost of natural gas, higher interest
expense (including a charge in the first quarter of 2003 of $4.3 million for
the write-off of deferred fees for debt repaid with proceeds from the Senior
Secured Notes and other related payments) and lower sales volumes during the
period, offset by an improvement in earnings as a result of cost reductions due
to manufacturing efficiencies, certain prices increases and lower operating
lease expenses.

Liquidity and Capital Resources

The Companys principal sources of liquidity are funds derived from
operations and borrowings under the Revolving Credit Facility. The Company
believes that cash flows from operating activities, proceeds from the issuance
of the Additional Notes, combined with available borrowings under the Revolving
Credit Facility will be sufficient to support its operations and liquidity
requirements for the foreseeable future, although the Company cannot be assured
that this will be the case. Peak operating needs are in the spring, at which
time working capital borrowings are significantly higher than at other times of
the year.

Cash Flows

Operating Activities.Operating activities consumed $11.8 million in cash
in the first half of 2003, as compared to cash provided of $33.1 million in the
first half of 2002. This increase in cash consumed reflects the decline in
earnings of approximately $15.3 million and changes in working capital items.
Inventory levels increased approximately $30.1 million and current liabilities
declined approximately $10.1 million from year-end 2002 levels. Although the
Company has historically built inventory in the first quarter of the year, it
built slightly higher than normal inventory levels in the first and second
quarters of 2003 as a result of the lower shipment volume in the first half of
2003 caused by the effects of the temporary softness in the economy and winter
weather. In addition, as a result of higher natural gas prices, net cash
outlays for natural gas purchases in the six months ended June 30, 2003
increased approximately $10.7 million as compared to the same period of 2002.
Furthermore, interest payments in the first half of 2003 were approximately
$12.1 million, as compared to approximately $6.4 million in the first six
months of 2002.

Investing Activities.Cash consumed in investing activities was $82.3
million in the first half of 2003, as compared to $36.4 million in the same
period of 2002. Capital expenditures were $56.2 million in the first six months
of 2003, as compared to $37.3 million in the first six months of 2002. In the
second quarter of 2003, the Company incurred expenditures of approximately
$12.9 million in preparation for the capital improvement project at its Warner
Robins, Georgia facility, which commenced in July 2003. In addition, in the
first quarter of 2003, the Company completed a $28.0 million project at its
Henryetta, Oklahoma facility, including approximately $11.8 million to expand
and improve overall productive capacity. In the first quarter of 2002, the Company invested approximately
$16.6 million and completed the

12



---



##### Table of Contents



$31.0 million modernization project at the
Elmira, New York facility. In the first quarter of 2003, the Company used
approximately $45.0 million of the proceeds from the offering of the Senior
Secured Notes to terminate certain equipment leases by purchasing from the
respective lessors the equipment leased thereunder. In addition, the Company
financed $10.0 million of equipment under its master lease agreement.

Financing Activities.Net cash provided for financing activities was $94.1
million in the six months ended June 30, 2003, as compared to $3.2 million in
the six months ended June 30, 2002. The net financing activities in 2003
principally reflects the proceeds of the offering of $300.0 million of Senior Secured Notes and
repayment of the First Mortgage Notes, the Term Loan and advances then
outstanding under the Revolving Credit Facility. See   Overview  Senior
Secured Notes Offering. On August 30, 2002, pursuant to the PBGC Agreement,
Anchor had granted the PBGC a warrant for the purchase of 474,000 shares its
common stock. In June 2003, the Company repurchased all of the outstanding
warrants held by the PBGC for a negotiated price of $1.5 million.

Debt and Other Contractual Obligations

In February 2003, the Company completed an offering of 11% Senior Secured
Notes. In August 2003, the Company completed an additional offering of 11%
Senior Secured Notes. See   Overview  Senior Secured Notes Offering.

Under a master lease agreement entered into in December 2002, the Company
leased equipment in the amount of $20.0 million in the aggregate. The Company
financed $10.0 million of equipment in December 2002 and an additional $10.0
million of equipment in March 2003, each under a lease term of five years. The
master lease agreement is structured as a capital lease under GAAP. For each
group of equipment items the Company agreed to lease, it entered into an
equipment schedule that applied the terms of the master lease to such
equipment.

In August 2002, in connection with the Reorganization, the Company entered
into a ten-year payment obligation under the PBGC Agreement. The Company is
required to make monthly payments to the PBGC in the amount of $833,333.33. The
present value of this obligation was approximately $62.9 million at June 30,
2003.

As of August 5, 2003, following the issuance of the proceeds from the
Additional Notes, there were no advances outstanding under the Revolving Credit
Facility, borrowing availability was approximately $89.8 million and
outstanding letters of credit on this facility were approximately $8.0 million.

The obligations under the Revolving Credit Facility are secured by a first
priority security interest in all of the Companys inventories, receivables,
general intangibles and proceeds therefrom. In addition, the Revolving Credit
Facility contains customary negative covenants and restrictions for
transactions including, without limitation, restrictions on indebtedness,
liens, investments, fundamental business changes, asset dispositions outside of
the ordinary course of business, certain junior payments, transactions with
affiliates and changes relating to indebtedness. The Revolving Credit Facility
requires that the Company meet a quarterly fixed charge coverage test unless
minimum availability declines below $10.0 million in which case the Company
must meet a monthly fixed charge coverage test.

In the remainder of 2003, the Company expects significant cash outlays
including approximately $51.0 million for capital expenditures, $17.5 million
for interest payments on the Senior Secured Notes and Additional Notes,
approximately $5.2 million for payments under its capital and operating leases
and $5.0 million for payments under the PBGC Agreement.

In addition to the above, the Company is obligated to pay approximately
$2.9 million annually related to its post-retirement benefit plan and
approximately $5.2 million annually to multiemployer plans for the future
service benefits of its hourly employees. The Series C Participating Preferred
Stock is subject to redemption at the Companys option at any time in whole,
but not in part, at a redemption price equal to the sum of (i) one thousand dollars per share plus all accrued and unpaid
dividends on such share computed

13



---



##### Table of Contents



to the date of redemption and (ii) 15% of the
fair market value of all of the outstanding shares of common stock divided by
the number of outstanding shares of Series C Participating Preferred Stock. The
portion of the redemption price specified in clause (ii) of the preceding
sentence will, at the option of the Company, be payable either in cash or in
shares of common stock. The Series C Participating Preferred Stock is entitled
to receive dividends, at a rate per annum equal to 12%. Dividends are payable
quarterly in cash, if and when declared by the Board of Directors and, to the
extent not paid currently with respect to any quarterly period, will accrue and
compound quarterly. Unpaid dividends of $7.8 million ($103.64 per share) as of
June 30, 2003 were accrued and have been included in other long-term
liabilities in the accompanying condensed balance sheet.

Capital Expenditures

Capital expenditures were approximately $56.2 million in the first half of
2003 and are expected to total approximately $108 million in 2003 and $55
million in 2004, respectively. The capital expenditures in the remainder of
2003 include capital improvement projects at our Warner Robins, Georgia, Salem,
New Jersey and Lawrenceburg, Indiana facilities. The Companys principal
sources of liquidity for funding of the remaining 2003 and 2004 capital
expenditures are expected to be from the proceeds of the issuance of the
Additional Notes, funds derived from operations and borrowings under the
Revolving Credit Facility.

Off-Balance Sheet Arrangements

Except for operating lease commitments, the Company is not party to any
off-balance sheet arrangements.

Impact of Inflation

The impact of inflation on the Companys costs, and the ability to pass on
cost increases in the form of increased sales prices, is dependent upon market
conditions. The Company has experienced significant cost increases in specific
materials and energy and has not been fully able to pass on these cost
increases to its customers for several years, although the Company did realize
some price increases in 2001 and 2002, primarily due to the abnormally high
energy costs experienced in 2001. Since 2002, closing prices for natural gas
have fluctuated significantly from a low of $1.830 per MMBTU in October 2001 to
a high of $9.978 per MMBTU in January 2001, compared to an average price of
$2.238 per MMBTU from 1995 through 1999. Since the 2001 price peak, natural gas
prices have remained volatile. From January through August of 2003, natural gas
prices have closed between $4.693 and $9.133 per MMBTU with the high being in
March 2003 and the low being August 2003. A material increase in the price of
natural gas would have a material adverse effect on the Companys results of
operations and financial condition.

Seasonality

Due principally to the seasonal nature of the brewing and some other
segments of the beverage industry, in which demand is stronger during the
summer months, the Companys shipment volume is typically higher in the second
and third quarters. Consequently, the Company has historically built inventory
during the fourth and first quarters in anticipation of seasonal demands during
the second and third quarters. However, due to increased demand at the end of
2001 and the beginning of 2002, the Company shipped more than usual and built
up less inventory in those periods.

In addition, although the Company seeks to minimize downtime, it has
historically scheduled shutdowns of its plants for furnace rebuilds and machine
repairs in the fourth and first quarters of the year to coincide with scheduled
holiday and vacation time under its labor union contracts. These shutdowns
normally adversely affect profitability during the fourth and first quarters.

14



---



##### Table of Contents



Information Concerning Forward-Looking Statements

This report includes forward-looking statements. Forward-looking
statements include, without limitation, any statement that may predict,
forecast, indicate or imply future results, performance or achievements, and
may contain the words believe, anticipate,
expect, estimate,
intend, project, will be,
will likely continue, will likely
result, or words or phrases of similar meaning including, among other things,
statements concerning:



| |  |  | the Companys liquidity and capital resources;                                          
| | - |  | ----------------------------------------------------------------------------------------
|
| |  |  | competitive pressures and trends in the glass container or beverage and food industries;
|
| |  |  | prevailing interest rates;                                                              
|
| |  |  | prices for energy, particularly natural gas, and other raw materials;                   
|
| |  |  | legal proceedings and regulatory matters; and                                           
|
| |  |  | general economic conditions.                                                            

Forward-looking statements involve risks and uncertainties faced by the
Company including, but not limited to, economic, competitive, governmental and
technological factors outside the control of the Company, that may cause actual
results to differ materially from the forward-looking statements. These risks
and uncertainties may include the highly competitive nature of the glass
container industry and the intense competition from makers of alternative forms
of packaging; fluctuations in the price of natural gas; the Companys focus on
the beer industry and its dependence on certain key customers; the seasonal
nature of brewing and other beverage industries; volatility in demand from
emerging new markets; the Companys dependence on certain executive officers;
and changes in environmental and other government regulations. The Company
operates in a changing environment in which new risk factors can emerge from
time to time. It is not possible for management to predict all of these risks,
nor can it assess the extent to which any factor, or a combination of factors,
may cause actual results to differ materially from those contained in
forward-looking statements. Given these risks and uncertainties, readers are
cautioned not to place undue reliance on forward-looking statements.

New Accounting Standards

In November 2002, the Financial Accounting Standards Board issued FASB
Interpretation No. 45  Guarantors Accounting and Disclosure Requirements for
Guarantees, Including Indirect Guarantees of Indebtedness of Others (FIN 45).
FIN 45 requires that, upon issuance of a guarantee, the guarantor must
recognize a liability for the fair value of the obligation it assumes under
that guarantee. The provisions for initial recognition and measurement for FIN
45 should be applied on a prospective basis to guarantees issued or modified
after December 31, 2002. This interpretation did not have a significant effect
on the Companys financial position or results of operations.

In January 2003, the Financial Accounting Standards Board issued FASB
Interpretation No. 46  Consolidation of Variable Interest Entities (FIN
46). The primary objectives of FIN 46 are to provide guidance on how to
identify entities for which control is achieved through means other than
through voting rights. The adoption of this interpretation did not impact the
Companys financial position or results of operations.

In January 2003, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 150  Accounting for Certain Financial
Instruments with Characteristics of Both Liabilities and Equity (SFAS 150),
effective for financial instruments entered into or modified after May 31,
2003, and otherwise effective at the beginning of the first interim period
beginning after June 15, 2003. SFAS 150 establishes standards for how an issuer
classifies and measures certain financial instruments with characteristics of
both liabilities and equity. The adoption of SFAS 150 will not impact the
Companys financial position or results of operations.

15



---



##### Table of Contents






Item 3. Quantitative and Qualitative Disclosures about Market Risk.

The Revolving Credit Facility is subject to interest rates based on a
floating benchmark rate (the prime rate or eurodollar rate), plus an applicable
margin. The applicable margin was fixed through February 2003, and thereafter
became a fixed spread based on the Companys level of excess availability. A
change in interest rates under the Revolving Credit Facility could adversely
impact results of operations. A 10 percent fluctuation in the market rate of
interest would impact annual interest expense by approximately $0.3 million,
based on average borrowings outstanding during 2002. The Companys long-term
debt instruments are subject to fixed interest rates and, in addition, the
amount of principal to be repaid at maturity is also fixed. Therefore, the
Company is not subject to market risk from its long-term debt instruments.

Less than 1% of the Companys net sales are denominated in currencies
other than the U.S. dollar, and the Company does not believe its total exposure
to currency fluctuations to be significant. The Company has hedged certain of
its estimated natural gas purchases, typically over a maximum of six to twelve
months, through the purchase of natural gas futures. The Company does not enter
into such hedging transactions for speculative trading purposes but rather to
lock in energy prices. Also, the Company has entered into put and call options
for purchases of natural gas. Accounting for these derivatives may increase
volatility in earnings.




Item 4. Controls and Procedures.

An evaluation was carried out, within the 90 days prior to the filing of
this report, under the supervision of the Chief Executive Officer and the Chief
Financial Officer of the effectiveness of the design and operation of the
Companys disclosure controls and procedures pursuant to Exchange Act Rules
13a-14 and 15d-14. Based on that evaluation, Anchors Chief Executive Officer
and Chief Financial Officer have concluded that the Companys disclosure
controls and procedures are effective.

There were no significant changes in the Companys disclosure controls and
procedures or in other factors that could significantly affect these controls
and procedures subsequent to the date of their evaluation and there were no
corrective actions with regard to significant deficiencies and material
weaknesses in these controls and procedures.




PART II - OTHER INFORMATION




Item 1. Legal Proceedings.

In September 2001, The National Bank of Canada, acting on its own behalf
and on behalf of PNC Bank, filed a complaint, in Allegheny Common Pleas Court,
against Anchor, GGC, Consumers U.S. and certain other former affiliates of
Anchor. The complaint alleged, among other things, fraudulent conveyances made
by GGC to Anchor and tortious interference with the contractual relationship
between the bank and GGC and sought monetary damages. On May 19, 2003, the
Company entered into an agreement under which the bank agreed to settle and
discontinue the action referred to above in return for the Companys agreement
to contingently guarantee certain indebtedness of GGC to the bank, in an amount
not to exceed $1.65 million, over a maximum term of fourteen months, with the
amount of the guarantee decreasing on a monthly basis. The recording of the
fair value of the guarantee did not have a material effect on the financial
position or results of operations of the Company.

In addition, the Company is, and from time to time may be, a party to
routine legal proceedings incidental to the operation of its business. The
outcome of any pending or threatened proceedings is not expected to have a
material adverse effect on the financial condition, operating results or cash
flows of the Company, based on the Companys current understanding of the
relevant facts. Legal expenses incurred related to these contingencies are
generally expensed as incurred.

The Companys operations are subject to various federal, state and local
requirements that are designed to protect the environment. Such requirements
have resulted in the Company being involved in

16



---



##### Table of Contents



related legal proceedings,
claims and remediation obligations. Based on the Companys current understanding of the relevant facts, the Company does not believe that its
environmental exposure is in excess of the reserves reflected on its balance
sheet, although there can be no assurance that this will continue to be the
case.




Item 2. Changes in Securities and Use of Proceeds.



| |  | None.
| |  | -----




Item 3. Defaults Upon Senior Securities.



| |  | None
| |  | ----




Item 4. Submission of Matters to a Vote of Security Holders.



| |  | None
| |  | ----




Item 5. Other Information.



| |  | None
| |  | ----




Item 6. Exhibits and Reports on Form 8-K.



| |  | (a.) | Exhibits
| |  | ---- | --------

| |  |              |  |                                                                  
| |  | ------------ |  | -----------------------------------------------------------------
| |  | Exhibit 31.1 |  | Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer
| |  |              |  |                                                                  
| |  | Exhibit 31.2 |  | Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer
| |  |              |  |                                                                  
| |  | Exhibit 32   |  | Section 1350 Certifications                                      



| |  | (b.) | Reports on Form 8-K                                                                                                                                                                                                                                                                                                   
| |  | ---- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |      | Current Report on Form 8-K dated July 28, 2003 and furnished July 29,
2003 under Item 9 (in accordance with SEC Release No. 33-8216, the
information is intended to be furnished under Item 12), regarding a
press release relating to the Companys results of operations for the
second quarter ended June 30, 2003.

17



---



##### Table of Contents






SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

|                      |  |                                   
|--------------------- |  | ----------------------------------
|                      |  | ANCHOR GLASS CONTAINER CORPORATION
|                      |  |                                   
|Date: August 14, 2003 |  | /s/ Darrin J. Campbell            
|                      |  |                                   
|                      |  | Darrin J. Campbell                
|                      |  | Executive Vice President and      
|                      |  | Chief Financial Officer           
|                      |  | (Principal Financial Officer and  
|                      |  | Duly Authorized Officer)          

18